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Aurizon wins from well-timed sale

Greg Roberts

Coal hauler Aurizon's shares shone after a well-timed sell down of its stake by the Queensland government netted it $806 million.

Large wholesale investors quickly snapped up the 200 million shares being sold on Monday, in a vote of confidence in the coal industry despite the weak prices of late.

Aurizon's shares lifted two cents, or 0.5 per cent, to $4.06 on a day the rest of the market plummeted by around two per cent.

The sale came after a 10-day period when the nation's largest coal mover shored up its dominance by inking lucrative, more-than-decade-long haulage deals with giants BHP Billiton and Xstrata.

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Last week Aurizon was was revealed to be part of a proposed deal with Indian and Gina Rinehart-owned GVK Hancock to build a $6 billion rail line in Queensland.

Analysts viewed the government move on Monday to cut its holding from 18.2 per cent to 8.9 per cent as perfectly timed.

Queensland Treasury reaped $806 million at $4.03 a share, a tiny discount to Friday's closing price of $4.04.

That represents a $300 million gain on the $2.55 the company was floated on the stock exchange.

"Normally, if you take 9-10 per cent of a business of that size, you would have to take a fairly large discount to market," Morningstar analyst Ross MacMillan told AAP.

"They really have a dominant position there, there is a lot of demand for these infrastructure businesses and they have a 99-year lease over the largest coal network in Australia in central Queensland.

"BHP Billiton, Mitsubishi and Mitsui have quality low-cost coal mines, demand is pretty much locked in and the rail is essential infrastructure to get it to port."

Australia is the world's largest coal exporter, and coal is the nation's second-biggest earner but the industry has undergone a shakeout in the past year due to low prices, including mine closures and mass job losses.

The Queensland government sold down its 34 per cent stake in then-named QR National in October, collecting $1.5 billion at $3.47 a share, representing a $400 million gain excluding $61 million in dividends.

It was always thought the state government would sell its stake, so the fact that the uncertainty around its "overhang" was now less, was a good thing, IG Markets market strategist Evan Lucas said.

Queensland Treasurer Tim Nicholls said the money would go to paying down debt and there was no current intention to sell more shares in the near term.